Week 2 Flashcards
What is Demand?
Demand is an economic principle referring to a consumer’s desire to purchase goods and services, and willingness to pay a price for a specific good or service.
give an Example to show your understanding of demand
For example: you desire to have a bike, but you don’t have enough money to buy it. The desire become demand only when you are ready to spend money to buy bike.
What is the economist Ferguson’s definition of demand?
Demand refers to the quantities of commodity that the consumers are able to buy at each possible price during a given period of time, other things being equal.
What is the economist B.R.Schiller’s definition of demand?
Demand is the ability and willingness to buy specific quantity of a good at alternative prices in a given time period, ceteris paribus.
what is the relation between Desire and demand?
The relation between Desire and demand is that, demand is the amount of commodity for which consumer has willingness and ability to buy.
what is the relation between price and demand?
The relation between Price and demand is that, demand is always at a price. Unless price is stated, the commodity has no meaning. The consumer must know both the price and the commodity.
what is the relation between Utility and demand?
the relation between Utility and demand that, demand depend upon utility of the commodity. A consumer is rational and demands only those commodities which provide utility.
State the 4 main purposes of demand study
The 4 main purposes of demand study are:
1) Demand Forecasting
2) Production planning
3) Sales forecasting
4) Control of Business
Furthermore purposes may be:
a) inventory control
b) Growth and long term investment decisions
c) economic planning and policy making for planners or engineers
How is Demand Forecasting a purpose of Demand study?
Forecasting of demand is the art of predicting demand for a product or a service at some future date on the basis of certain present and past behavior pattern of some related events.
How is Production planning a purpose of Demand study?
: demand analysis is prerequisite for the production planning of a business firm.
How is Sales forecasting a purpose of Demand study?
Sales forecasting is based on the demand analysis.
How is Control of Business a purpose of Demand study?
It is essential for controlling the business, to have a well conceived budgeting of costs and profits that is based on the estimation of yearly demand/sales and prices.
What are the seven (7) major factors affecting Demand?
the seven (7) major factors affecting Demand are:
1) Price of related goods
2) Size of population
3) Price of the commodity
4) Expectations
5) Consumer’s Income
6) Taste & Preference
7) Income distribution
How is ‘Price of related goods’ a factor affecting Demand?
‘Price of related goods’ a factor affecting Demand because, Demand for a commodity is also influenced by change in price of related goods. For example: substitute goods, complementary goods.
How is ‘the Size of the population’ a factor affecting Demand?
‘the Size of the population’ is a factor affecting Demand because, : demand rises with the rise in population and vice versa.
